Sunil Mittal on organised retail in India

sunil_mittalTelecom baron, Sunil Bharti Mittal has spoken about his take on organised retail, including his reasons for why he choose Wal-Mart over Tesco as his retailing partner, in an interview in the Business Standard (5th January, 2007). We reproduce below relevant excerpts from the interview:

On Tesco tie up not coming through:

We were a partner of choice for many retailers worldwide and it is true that we were in discussions with Tesco for a long period. But we needed a partner with similar ambitions in India as far as speed, scale and size of operations are concerned, and Wal-Mart scored fairly high on these parameters.

On fears of small kirana stores being wiped out by big MNC retailers:

Whether Wal-Mart comes or not, those who are inefficient would go away. Our research shows that the younger generation in families that own small shops are less inclined to run them – they are more educated.

So a large number of such shops will close down. Also, rentals are rising sharply, so renting the shop out would be more profitable than running it. Surely, there will be those who would face the impact of organised retail, whether Indian or foreign.

My estimate is that if in the next 10 years, India reaches a retail trade level of $500 billion, not more than $50-75 billion would come to the organised sector. So all such fears are baseless. In fact, organised retail will generate a large number of jobs, some of which would go to the children of such shopkeepers.

On quality commercial space having been already acquired by existing players:

If you look at the Rahejas, Pantaloon or RPG, how much space have they acquired? Nobody has even scratched the surface. Sure, the prices are high, and they have to be closely watched, but there is no dearth of availability.

On Hypermarket format not being succesful outside big cities in India:

Wal-Mart does small formats in Japan and Mexico. In the US, it has only large formats. We are clear that we will do multi-formats, but big-box strategy will be a thrust area.

— Business Standard (Issues and Insights: Q & A) January 5, 2007.

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3 responses to “Sunil Mittal on organised retail in India

  1. I dont understand one thing. Mr. Mittal saying that organised retail will absorb the children of kirana shopkeepers. Come On. This is not done. We are talking about entreprenuer ship in india and you talking like a poorly thinking capitalist.

    I think the near reality is agitation and restlessness. I want to see a corporate coming our with a plan to consolidate this kirana merchants to convert into a supermarket franchise. Space is no problem. Subhiksha stores in mumbai are so small and with so little investment. come-on Indian Kirnawala can affort when lots of nationalised bank giving 1 crore loan easily.

  2. Mr. Mittal is talking the wal-mart language even before we have seen something on the ground in reality. (wish he is aware of the adverse wal-mart impact in us too).

    Having been in the retail industry for about 7 years, i strongly believe that a smart credit financing model (for managing their working capital needs) for the millions of merchant shopkeepers, providing the back-end scale of the biggies can make for a Indian retail scenario that has place for all, corporates with own store, large co-operatives (of the million plus shopkeepers)…

    let us not forget that in India opening kirana store is the easiest way out of unemployment.. what mittal talks about is too outlandish providing jobs for millions..

    considering that retailing industry world-wide has been fluctuating between the two broad poles /perpetual approaches ..a shallow depth maximum width merchandise/ services model .. to.. max.depth wide width model..irrespective of categories/formats there is market for all as long one gets his operations in place to be relevant to market needs and biz dynamics..

    Subhiksha has proved it beyond a point that its philosophy is a way out for the majority of Indian kirana outlet owners across the Indian sub-continent..

  3. regarding the talk that sunil mittal speaks that employment part and space abailibility part is not a big issue seems to be outlandish since the kind of technology which walmart has in its backend will simply not go with the quote “it will generate more employment”said by him.
    Instead of why not if this is the matter walmart should club all these regional kirana stores together and keeping mutual benefits in mind move forward.
    moreover if v think on other side of the coin it will benefit itself also because afterall these kirana stores are a part of society and the word “patriotism” should be kept on mind.

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